Insurance Hike Hits Nn, Likely Residents

NEWPORT NEWS — Homeowners will probably see wind-related premiums rise after a change in requirements for the city.

Newport News homeowners might suffer the consequences of a change that will require the city to pay more for insurance that protects its properties from wind-related damage.

It's unclear how much more homeowners might have to pay, but because of the change, insurance agents might be less likely to underwrite wind damage now, said James Crank, president of JSC Insurance, a Hampton-based company.

The group that insures city-owned property, Virginia Municipal League, changed the city's category for wind-exposure insurance during a June renewal.

Newport News, which was classified Tier II, is now a Tier I city and rated as if it were on the coast.

This is the first time that Newport News has been reclassified, said David Gossett, city administrator of the office of self-insurance.

"It certainly caught us off guard, to say the least," Gossett said.

Newport News looked elsewhere for insurance, but some insurance companies declined to even offer the city a quote because of its new wind exposure, officials said.

One rejected offer proposed that the city assume a 5 percent deductible on each property, which could have cost the city millions of dollars if a big storm hit.

The city went with the municipal league's offer but not before some negotiations: The league first wanted a $250,000 deductible for all disasters and a $750,000 deductible for all named storms.

Accepting that extra risk would have put the city at a premium of $678,555, a 36.5 percent jump from what it pays now.

In the end, the city elected to take more risk by going with a $500,000 deductible for disasters and a $750,000 deductible for named storms.

The city will pay a premium of $564,937 this fiscal year, which started July 1.

The amount is about $125,000 more than it paid last fiscal year and $65,000 more than it budgeted. After floods caused by strong winds hit coastal areas, insurance companies look at the damage and very often assign raised rates for wind exposure on houses there, said Crank of JSC Insurance. "With local homeowners classified as more susceptible to wind now," he said, "companies will look at them much more strictly." *

INSURANCE FOR THE CITY

Because of a reclassification regarding potential wind damage:

* Newport News will pay about $125,000 more than it paid during the last fiscal year.

* The new premium is $65,000 more than the city budgeted.

* Homeowners could pay more for insurance premiums to cover wind-related damage on their properties.